"Grow-in" is a feature of pension legislation in Ontario and Nova Scotia. Not only are early retirement enhancements provided to terminated members on windup, service is credited as if the termination had not occurred. The ACPM has opposed grow-in and its effect on solvency valuations and plan wind-ups. In the Model Pension Law proposed by the Canadian Association of Pension Supervisory Authorities (CAPSA), grow-in is not a feature; wind-up issues are covered by enhanced vesting in the plan.
To date, there has been no indication that Ontario will change its position on grow-in, despite efforts by the ACPM. However, the Nova Scotia government reconsidered its position on grow-in. To help with the process, we have forwarded a copy of a letter we sent earlier (on May 14, 2004) to the Chair of the province’s Law Amendments Committee. The letter outlines the ACPM’s position on grow-in. Nova Scotia plans now do not have to fund for grow-in benefits.
The ACPM will continue to press for the removal of grow-in from pension legislation.
“Locking-in” is the requirement that the money in a registered pension plan (RPP) be used to provide a retirement income stream – it can’t, as a general rule, be cashed out by the member. The merits of locking-in have been debated over the past few years. Saskatchewan has modified locking-in requirements. Alberta is considering it. Ontario has already relaxed its locking-in rule to give members access under certain circumstances (illness, financial hardship or out-of-country residency.)
The ACPM’s Advocacy and Government Relations Committee (AGRC) has discussed this issue over the past couple of years. In 2002, a sub-committee was established to review the issue. The consensus is that governments should proceed with caution before doing away with locking-in rules for pension plans – except in special circumstances (terminal illness, financial hardship and perhaps out-of-country residency).
The issue was also put to an informal vote at the 2003 ACPM’s Annual Conference. During an Open Forum session, participating members showed a preference for no change to current locking-in provisions.
The ACPM’s Alberta Regional Council submitted a paper on locking-in to the Alberta government early in 2004. In it, they reflected the ACPM’s position, although they also implied a preference for easing current rules.
The ACPM will continue to monitor this issue.
Across Canada, provinces differ in their treatment of pensions in cases of marriage breakdown. Further, the rules in any given province are not always clear or workable.
In January 2004, in response to an Alberta Finance Discussion Paper, the ACPM’s Alberta Regional Council, submitted a paper on Pension Division on Marriage Breakdown. In addition, the ACPM’s Advocacy and Government Relations Committee (AGRC) has discussed this issue in the context of the Model Pension Law.
This is a prime issue for national harmonization with the Model Law initiative.